Credit Card Interest Calculator

Credit card interest is typically calculated using your Annual Percentage Rate (APR) divided by 12 for a monthly rate. This rate is applied to your average daily balance. Interest compounds, meaning you pay interest on previously charged interest.

APR (Annual Percentage Rate) is the yearly interest rate charged on credit card balances. It includes both the interest rate and other costs. For credit cards, the APR and interest rate are typically the same.

The best way to avoid credit card interest is to pay your full balance by the due date each month. Most cards offer a grace period between the statement closing date and the due date where no interest is charged if you pay in full.

Interest charges can increase if: 1) Your balance increased, 2) Your APR increased, 3) You made a late payment, or 4) You're being charged interest on interest (compounding).

The average credit card APR is around 20%. Anything below 18% is considered good, while rates below 15% are excellent. However, the best strategy is to pay your full balance each month to avoid paying any interest.